March 31 deadline for FDI norms looms: WS Retail still pushing biggest cart on Flipkart


MUMBAI|KOLKATA: WS Retail posted a 33% increase in sales to Rs 13,921 crore for the year ended March 2016, underscoring its dominance as Flipkart’s largest vendor. The online marketplace is looking to lower this dependence to comply with government rules. WS Retail’s net profit surged to Rs 5.2 crore from Rs 84 lakh a year ago, according to Registrar of Company filings.

The company accounts for nearly 90% of goods sold on Flipkart which posted revenues of Rs 15,403 crore in fiscal 2016. Government regulations stipulate that a single vendor cannot account for more than a fourth of the sales of an online marketplace with foreign investment. Amazon, Flipkart and other similar marketplaces have to comply with this guideline by March 31.

As India’s leading marketplace, Flipkart has over one lakh sellers on its platform and WS Retail is one of them, a spokesperson said. “We have no comment on the financials of WS Retail. We are in full compliance of all laws and regulations,” the person said in an email.

March 31 deadline for FDI norms looms: WS Retail still pushing biggest cart on Flipkart

WS Retail’s revenue is more than the combined sales of top brick-and-mortal retailers such as Shoppers Stop, Future Lifestyle, Tata’s Trent and Aditya Birla Group’s Pantaloons. The seven-year-old company was floated by Flipkart founders Sachin Bansal and Binny Bansal. About four years ago, the Bansals sold their stake to former OnMobile global chief operating officer Rajeev Kuchhal and a clutch of other investors.

“Flipkart has to reduce its dependence on WS Retail to follow government guidelines,” said Harminder Sahni, founder of Wazir Advisors. “In accounting terms, there will be no impact, but if they fail to get multiple large vendors to source goods from, then their operations could be impacted.”

In the past two years, Flipkart has been shifting away from an inventory-led model to a marketplace, which allows over one lakh sellers to compete on the portal in nearly 80 categories. WS Retail’s sales is likely to decline substantially in the current fiscal as Flipkart seeks other vendors to source exclusive and high-value products.

The marketplace has turned to a fresh crop of sellers for exclusive brands and deals to comply with the government regulation. Sellers such as OmniTech Retail, TrueCom Retail, IndiFlash Mart and RetailNet have entered into deals for sourcing products that will be sold through Flipkart.

All high-value and volume-generating categories like smartphones, televisions, appliances, apparel, watches and shoes are now handled by different sellers.

“WS Retail has stopped purchasing stock for Flipkart. Different new sellers are buying it for selling through Flipkart,” said the CEO of a leading electronics brand, which sells through Flipkart. “The changes were done so that WS Retail can comply with the government’s FDI (foreign direct investment) regulations.”